Cord cutters, it could be worse than you think.
Higher Netflix billsmight just be the beginning of the effects from a federal circuitcourt's recent striking-down of the Federal Communications Commission'sopen Internet rules.
Consumers could be facing an online futurethat more resembles the current pay TV ecosystem - the exact thing thatmany Netflix consumers attempt to evade as they cut the cord.
"Peopleare going to be upset. What I hate about my pay TV service you aregoing to do to my Internet service, too?" says Phil Swann, president of TVPredictions.com. "It's opened the door to the likelihood of that reality unless something changes."
Backin 2010, the FCC adopted so-called net neutrality rules requiringbroadband providers to treat all Net traffic the same. Verizonchallenged those rules, and on Jan. 14 the U.S. Court of Appeals inWashington upheld the company's challenge.
Theresult? "Companies are going to be able to negotiate (with Internetservice providers) for certain most-favored-nation status and smallercompanies that can't afford that are going to get left out," saysCorynne McSherry, intellectual property director for the Electronic Frontier Foundation. "And the consumer will never know because all they will know is this service is working better than others."
Since Netflixis a bandwidth hog, accounting for nearly one-third of all Net trafficduring peak periods, subscribers rightly feel threatened. But thestreaming giant could just be the most obvious target in a newnon-neutral Net.
"Companies would make deals just as they makedeals to be on a cable system or satellite system," Swann says. "Andyour Internet would not just be $30, $40 or $50 per month; it's going tobe so much per month depending on what services you get with that. Ithink that's where the ISPs will eventually go with this. It's too goodfor them not to do that."
Consumers have embraced streaming moviesand TV with subscription services up 31% to nearly $3.2 billion in2013, according to IHS Technology. And new Internet TV ventures are inthe works at Sony and possibly DirecTV, which has expressed interest in asports streaming service aimed at younger viewers who might not get payTV.
Add those two projects to the already-crowded streaming spacewith Amazon, Apple, Google, Target and Verizon/Redbox and "that's a lotof companies with a lot of money," Swann says. "And ISPs are going,'What a feast this could be for us.'"
Echoing Swann's concerns is Rashad Robinson, executive director of minority consumer group ColorOfChange.org,who said in a statement that "the Internet could very soon startlooking like cable TV, where one corporation holds the power to decidewhich content we're able to access."
Similarly, the WritersGuild of America, East labor union urged the FCC to "figure out how toprotect the interests of the public, and of the men and women who devotethemselves to creating the content the public loves."
Noteveryone is convinced that consumers will see a lot of change on homebroadband service, or that they would bear the brunt alone. "People arereally concerned about the concept of quality of service and ISPsblocking things," says Dan Bowman, chief technology officer ofnetworking company Sandvine. "We think that the court of public opinionprotects from that occurring."
It's the Waterloo, Ontario, firm'sreport that found Netflix accounts for 32% of all downstream Net trafficduring peak periods with YouTube close behind, accounting for 9%.
More likely, it is major networking companies such as Cogent and Level 3that provide connectivity for ISPs (the AT&Ts and Verizons of theworld) and content providers (Netflixes and Amazons) that will seek toadjust deals on each end of the equation, Bowman says.
For an ISP to tell a residential customer "that 'if you pay more, it will be less bad' is a hard message to sell," Bowman says.
Netflixmight already be preparing to pay more to connect to consumers, as ithas been testing a lower-priced $6.99 plan for new customers to get asingle stream of standard definition video. At the same time, thecompany plans this spring to begin streaming 4K video, which deliversmore than four times the resolution of HD - but thankfully won'tincrease video data traffic at quite that rate because of encoding.
"Itdoesn't take too much creativity to see a Netflix go, 'If you just wantstandard definition streaming it's going to be this much a month, ifyou want high definition, it's going to be this much and if you want 4Kstreaming this much per month' and so on," Swann says.
The FCC mayappeal the court decision - the fine points of which can be complicatedto the average consumer. Basically, the agency attempted to "pick andchoose" its regulatory powers in regard to the Internet, Bowman says,sometimes looking at broadband providers as common carriers, liketelephone companies, and other times as information services.
Instead,the court said that "the FCC has the duty to encourage openness on dataservices but they can't do it this complicated way," he says.
While FCC Chairman Thomas Wheeler mulls over an appeal or a new strategy, Sen. Ed Markey, D-Mass., has said he plans to introduce a bill that gives the agency the power to "preserve competition and safeguard consumers."
Inthe meantime, the EFF's McSherry encourages consumers to write or tweetconcerns about #NetNeutrality to their Internet providers. "Somecompanies really respond to that and if they know that people care aboutmore than just speedy Netflix access," she says, "they will respond."